Correlation Between ConnectOne Bancorp and Commerzbank

Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and Commerzbank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ConnectOne Bancorp and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConnectOne Bancorp and Commerzbank AG PK, you can compare the effects of market volatilities on ConnectOne Bancorp and Commerzbank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ConnectOne Bancorp with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and Commerzbank.

Diversification Opportunities for ConnectOne Bancorp and Commerzbank

-0.83

Correlation Coefficient

ConnectOne Bancorp  Commerzbank

Pay attention - limited upside

The 3 months correlation between ConnectOne and Commerzbank is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Commerzbank AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG PK and ConnectOne Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ConnectOne Bancorp are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG PK has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Commerzbank go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Commerzbank

Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 2.13 times less return on investment than Commerzbank. But when comparing it to its historical volatility, ConnectOne Bancorp is 1.15 times less risky than Commerzbank. It trades about 0.03 of its potential returns per unit of risk. Commerzbank AG PK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  899.00  in Commerzbank AG PK on September 20, 2024 and sell it today you would earn a total of  708.00  from holding Commerzbank AG PK or generate 78.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ConnectOne Bancorp  vs.  Commerzbank AG PK

ConnectOne Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, ConnectOne Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Commerzbank AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerzbank AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ConnectOne Bancorp and Commerzbank

The main advantage of trading using opposite ConnectOne Bancorp and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, Commerzbank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Commerzbank will offset losses from the drop in Commerzbank's long position.

The idea behind ConnectOne Bancorp and Commerzbank AG PK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.